Opinion
Civil Action No. 3:03-CV-2786-R.
June 23, 2004
MEMORANDUM OPINION
Before this Court are Motions by four corporate Defendants: Gibbs-Stallings Superstore, Inc., Team Motorsports of Missouri, L.L.C., Team Motor Sports, Inc., and TRM Classics and Collectible Autos, Inc. Each of the four puts forth a MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION, MOTION TO STRIKE FOR FAILURE TO STATE A CLAIM, AND MOTION FOR A MORE DEFINITE STATEMENT. All Defendants filed their Motions on November 17, 2003. For the reasons articulated below, all four Defendants' motions to dismiss on personal jurisdiction grounds are GRANTED.
I. BACKGROUND
Plaintiff Autoflex Leasing, Inc. ("Autoflex" or "Plaintiff"), a Texas corporation, leases and sells vehicles to a network of clientele mostly comprised of professional athletes. Autoflex contends that one of its former employees, Patrick Joiner ("Joiner"), used his access to Autoflex's network of clientele to divert business and profits from Autoflex to Defendants Gibbs-Stallings Superstore, Inc. ("Gibbs"), Team Motorsports of Missouri, L.L.C. ("Team Motorsports"), its predecessor company Team Motor Sports, Inc. ("Team Motor Sports"), and TRM Classics and Collectible Autos, Inc. ("TRM") (collectively, "Corporate Defendants"). Plaintiff originally alleged claims against the Corporate Defendants of common law fraud, conspiracy to commit fraud, tortious interference with contract, tortious interference with prospective business relations, and fraudulent concealment. Since removal to this Court, Plaintiff has amended its complaint to allege claims under the Texas Deceptive Trade Practices and Consumer Protection Act and of restitution or unjust enrichment. Defendants moves to dismiss on personal jurisdiction grounds and for failure to state a claim, and they move for Plaintiff to make a more definite statement.II. ANALYSIS
Defendants each move to dismiss the claims against them on three grounds: first, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction; second, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim for which relief can be granted; and third, pursuant to Rule 12(e) of the Federal Rules of Civil Procedure for a more definite statement.
A. Rule 12(b)(2) Standard
Rule 12(b)(2) authorizes a motion to dismiss based on the defense that a court lacks jurisdiction over the defendant. A federal court sitting in diversity may exercise personal jurisdiction over nonresident defendants to the extent permitted by applicable state law. Fed.R.Civ.P. 4(e)(1). The Texas long-arm statute provides for jurisdiction to the fullest extent permitted by the U.S. Constitution. See Tex. Civ. Prac. Rem. Code. Ann. § 17.042 (West 1997); Panda Brandywine Corp. v. Potomac Electric Power Co., 253 F.3d 865, 867 (5th Cir. 2001) (citing Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990)). Under the Due Process Clause of the Fourteenth Amendment, jurisdiction over a nonresident defendant comports with due process if: "(1) that defendant has purposefully availed himself of the benefits and protections of the forum state by establishing minimum contacts with the forum state, and (2) the exercise of jurisdiction over that defendant does not offend traditional notions of fair play and substantial justice." Panda Brandywine, 253 F.3d at 868 (quoting Alpine View Co. Ltd. v. Atlas Copco AB, 205 F.3d 208, 215 (5th Cir. 2000) (citations and internal quotation marks omitted)).
Minimum contacts can be established through contacts sufficient for either specific or general jurisdiction. Specific jurisdiction over a nonresident individual is proper when the nonresident defendant has "purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities." Id. at 868 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks omitted)). General jurisdiction arises "when the nonresident defendant's contacts with the forum state, although not related to the plaintiff's cause of action are continuous and systematic." Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984)).
This Court considers Defendants' Motions to Dismiss without conducting an evidentiary hearing. Thus, to survive Defendants' Motions, Plaintiff has the burden of "produc[ing] sufficient facts as to make out only a prima facie case supporting jurisdiction." Id. In determining whether or not Plaintiff has made a prima facie case, this Court "must accept as true [Plaintiff's] uncontroverted allegations, and resolve in its favor all conflicts between the facts contained in the parties' affidavits and other documentation." Id. Although a lower standard than that needed to prevail at trial, the Fifth Circuit noted in Panda Brandywine that the lower burden of proof:
does not automatically mean that a prima facie case for specific jurisdiction has been presented. Establishing a prima facie case still requires the plaintiff to show the nonresident defendant's purposeful availment of the benefits and protections of and minimum contacts with the forum state.Panda Brandywine, 253 F.3d at 868 (citing Burger King, 471 U.S. at 474). Mere "conclusory allegations" without any suggestion of supporting facts are insufficient. Id. at 869.
B. Defendant Gibbs-Stallings Superstore, Inc.
Plaintiff identifies two contacts on which to base a prima facie case for jurisdiction. Evidence submitted by Plaintiff substantiates its allegation that Gibbs engaged in a transaction regarding a vehicle acquired for a customer residing in Houston, Texas. Gibbs admits that it knew Joiner to be an employee of Autoflex, and Plaintiff alleges that Gibbs worked with Joiner to divert the auto-purchase transaction away from Autoflex. Accepting Plaintiff's supported allegations as true, this Court finds that Plaintiff has failed to establish a prima facie case for the exercise of specific jurisdiction over Gibbs. Only conclusory allegations by Plaintiff might indicate that Gibbs purposefully availed itself of jurisdiction in Texas courts. Gibbs contracted with a Texas resident and employed a vehicle shipping company in Texas, but such contacts do not establish minimum contacts with the forum state for jurisdictional purposes. C.f. Stuart v. Spademan, 772 F.2d 1185, 1192-94 (5th Cir. 1985). In addition, the contracts presented by Plaintiff as indications of specific jurisdiction fail to give rise to this dispute. Nor do the additional unilateral contacts from Joiner to Gibbs establish a prima facie case of specific jurisdiction. "The unilateral activity of those who claim some relationship with a nonresident defendant, however, cannot satisfy the requirement of contqact with the forum state." Id. at 1190. Plaintiff has failed to demonstrate that Gibbs has purposely availed itself "of the privilege of conducting business in Texas or that [it] invoked the benefits and protections of Texas law." Id. at 1192. As the Plaintiff has failed to establish minimum contacts, this Court need not extend its analysis to the second prong of the two-prong test for specific personal jurisdiction.
Plaintiff also alleges that this Court may properly exercise general personal jurisdiction over Gibbs. This Court disagrees. Defendant Gibbs is an Oklahoma corporation with its principal office in Holdenville, Oklahoma and no Texas-based offices. Gibbs is not authorized to do business in Texas; Gibbs has never resided in Texas; Gibbs has neither owned nor leased property in Texas; Gibbs has never maintained financial accounts in Texas; Gibbs has never directly solicited business from Texas residents, and Gibbs has never targeted advertising to Texas markets. Plaintiff offers (1) that Gibbs made hundreds or thousands of telephone calls to Texas, (2) that Autoflex bought over 30 vehicles from Gibbs between 1999 and 2001, and (3) that Gibbs advertises over the internet and in nationwide publications distributed throughout Texas. As to Plaintiff's first two offerings, "even repeated contacts with forum residents by a foreign defendant may not constitute the requisite substantial, continuous and systematic contacts required for a finding of general jurisdiction — in other words, while it may be doing business with Texas, it is not doing business in Texas." Revell v. Lidov, 317 F.3d 467, 471 (5th Cir. 2002) (citing Access Telecom, Inc. v. MCI Telecomm. Corp., 197 F.3d 694, 717 (5th Cir. 1999)). As to Plaintiff's third offering, Plaintiff never intimates that Gibbs engages in continuous and/or bilateral online contacts with Texas residents. Rather, Plaintiff avers that passive internet advertising and national advertising evidence continuous and systematic contacts. They do not. See id. at 470. This Court finds no continuous or systematic contacts to support Plaintiff's claim of general personal jurisdiction.
As Plaintiff has failed to put forth a prima facie case for this Court's exercise of personal jurisdiction, Defendant Gibbs' Motion to Dismiss on personal jurisdiction grounds is GRANTED. Accordingly, Gibbs' motions on 12(b)(6) and 12(e) grounds are DENIED AS MOOT.
C. Defendants Team Motorsports of Missouri, L.L.C. and Team Motor Sports, Inc.
Plaintiff treats Defendants Team Motorsports of Missouri and Team Motor Sports together as the "Team Defendants." Team Motor Sports, Inc. was dissolved in 2001, and it was the predecessor company to Team Motorsports of Missouri, L.L.C. While the two Defendants file separate Motions to Dismiss, the grounds upon which they move for dismissal, the evidence they site, and the facts they allege are identical. For the purposes of this portion of the analysis, this Court will treat the two companies together as the Team Defendants.
Defendant Team Motor Sports was a Missouri corporation that was dissolved in November of 2001. Its successor company, Team Motorsports, is a Missouri limited liability company with its principal office in Springfield, Missouri. The Team Defendants are not authorized to do business in Texas; they never have resided in Texas; they have neither owned nor leased property in Texas; they never have maintained financial accounts in Texas; they never have directly solicited business from Texas residents, and the Team Defendants have never specifically targeted advertising to Texas markets. The Team Defendants claim to have only communicated with Texas residents via phone conversations initiated by Texas residents.
Plaintiff contends that Team Defendants established minimum contacts with Texas by collaborating and conspiring with Joiner. Plaintiff identifies eleven instances at issue in this case between July of 2000 and January of 2002 in which Team Defendants purchased or leased vehicles from Texas retailers or sold vehicles to Texas residents, contracted with a Texas transportation company, and/or made payments of their ill-gotten gains to Joiner or his wife, both Texas residents. Evidence confirms wire transfers to Texas-based financial institutions for Joiner's benefit. Despite these transactions with Texas residents, the Team Defendants did not avail themselves of the benefits and protections of the State of Texas, and they could not have reasonably anticipated being haled into court in Texas.
Plaintiff also urges that this Court exercise jurisdiction on general jurisdiction grounds. Even assuming facts put forth by Plaintiff, Team Defendants do not appear to have established the kind of substantial, continuous, and systematic contacts with the State of Texas required for the exercise of personal jurisdiction in this case. See Alpine View, 205 F.3d at 217-18; see also Central Freight Lines Inc., 322 F.3d 376, 381 (5th Cir. 2003) (holding no general jurisdiction over out-of-state defendant where defendant regularly sent sales representatives to Texas to "develop business, negotiate contracts, and service national accounts.")
Defendant Team Motorsports of Missouri, L.L.C.'s Motion to Dismiss on personal jurisdiction grounds is hereby GRANTED, and Defendant Team Motor Sports, Inc.'s Motion to Dismiss on personal jurisdiction grounds is GRANTED.
D. Defendant TRM Classics and Collectible Autos, Inc.
Defendant TRM denies that it has purposely established minimum contacts with Texas, as it never directly solicited business in Texas, traveled to Texas, or initiated communications with Texas residents. Plaintiff alleges that TRM engaged in one illegal "kickback" transaction. Specifically, Plaintiff claims that, in acquiring a particular vehicle in response to a customer request, Autoflex purchased the vehicle from TRM, who had earlier purchased it from the Team Defendants. Plaintiff contends that Joiner ran the transaction through TRM and the Team Defendants to earn commissions for himself to the detriment of Autoflex. Defendant TRM is an Arkansas corporation with its principal office in Mountain Home, Arkansas and no Texas-based offices. TRM is not authorized to do business in Texas; TRM has never resided in Texas; TRM has neither owned nor leased property in Texas; TRM has never maintained financial accounts in Texas; TRM has never directly solicited business from Texas residents, and TRM has never targeted advertising to Texas markets. As earlier conveyed in the Gibbs analysis, Defendant TRM "may be doing business with Texas, [but] it is not doing business in Texas." Revell, 317 F.3d at 471. Plaintiff has failed to offer a version of facts to support a prima facie case for this Court's exercise of personal jurisdiction on specific jurisdiction grounds.
Plaintiff also contends that TRM engaged in substantial and systematic contacts with Texas. TRM admits that it sold or purchased numerous vehicles from Texas businesses within the past five years, and that TRM advertises over the Internet and/or in nationwide publications distributed throughout Texas. For reasons above explained, these contacts do not satisfy the requirements for this Court's exercise of general personal jurisdiction.
Defendant TRM's Motion to Dismiss for Lack of Personal Jurisdiction is hereby GRANTED. Accordingly, TRM's motions on 12(b)(6) and 12(e) grounds are DENIED AS MOOT.
III. CONCLUSION
1. Defendant Gibbs-Stallings Superstore, Inc.'s MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (filed November 17, 2003) is GRANTED.2. Defendant Gibbs-Stallings Superstore, Inc.'s MOTION TO STRIKE FOR FAILURE TO STATE A CLAIM and MOTION FOR A MORE DEFINITE STATEMENT (both filed November 17, 2003) are DENIED AS MOOT.
3. Defendant Team Motorsports of Missouri, L.L.C.'s MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (filed November 17, 2003) is GRANTED.
4. Defendant Team Motorsports of Missouri, L.L.C.'s MOTION TO STRIKE FOR FAILURE TO STATE A CLAIM and MOTION FOR A MORE DEFINITE STATEMENT are DENIED AS MOOT.
5. Defendant Team Motor Sports, Inc.'s MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (filed November 17, 2003) is GRANTED.
6. Defendant Team Motor Sports, Inc.'s MOTION TO STRIKE FOR FAILURE TO STATE A CLAIM and MOTION FOR A MORE DEFINITE STATEMENT are DENIED AS MOOT.
7. Defendant TRM Classics and Collectible Autos, Inc.'s MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (filed November 17, 2003) is GRANTED.
8. Defendant TRM Classics and Collectible Autos, Inc.'s MOTION TO STRIKE FOR FAILURE TO STATE A CLAIM and MOTION FOR A MORE DEFINITE STATEMENT (both filed November 17, 2003) are DENIED AS MOOT.
Pursuant to Magistrate Judge Stickney's Order Granting Joint Motion to Bifurcate Briefing and Extend Briefing Deadlines (filed January 20, 2004), Plaintiff is hereby given ten days to file a notice or motion voluntarily dismissing its claims against individual Defendants Chris Brannon and Mark Johnson, without prejudice.